1 / 8

Aim: What are “Technical” Factors That Affect Stocks?

Aim: What are “Technical” Factors That Affect Stocks? . Think About it: List some reasons that you buy something other than getting a good value or quality for the amount of money spent. Reasons We Buy. ___________________________________________ ___________________________________________

csilla
Download Presentation

Aim: What are “Technical” Factors That Affect Stocks?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Aim: What are “Technical” Factors That Affect Stocks? Think About it: List some reasons that you buy something other than getting a good value or quality for the amount of money spent.

  2. Reasons We Buy • ___________________________________________ • ___________________________________________ • ___________________________________________ • ____________________________________________ • ____________________________________________

  3. Technical Factors • Technical Analysis – Analyzes the mix of external conditions that alter supply and demand of stocks(equities). • Opposite of fundamental • Technical Factors: • Inflation – The overall strength of US currency • Economic Strength of Peers – Companies tend to move up and down with their sector/industry peers. • “Guilt by association” • Individual performance of company often overlooked

  4. Technical Factors • Other Types of Investments– The market shifts to bonds, foreign stocks and other types of investments. • Bonds investment will rise during times of high interest rates • Foreign stocks investment will rise due to value of US & foreign currency • Demographics (population age/investment goal)– 2 Dynamics: • 1 – Young and middle ages investors tend to invest in the stock market and take on higher risk stocks (equities) • 2 – Older investors move from market to bonds or low risk stocks for greater security of investment. • Liquidity – Refers to how much investor interest a stock has • Higher Market Cap = higher interest • Trading Volume will show level of liquidity • “Liquidity discount” – Term used for high quality small cap stocks that are fundamentally strong but gets little attention from the investment community. • Example: “A talented person who is overlooked because they are quiet”

  5. Technical Factors • Market Sentiment– The psychology of the market participants • Sentiment can be beneficial in predicting long term success of a company or industry. Ex: Amazon & Ebay • Sentiment based trading can hurt investors when investors dwell on a single piece of company news which never proves to occur resulting in depreciation of stock value. • Trends – A stock, sector, or industry may be the popular and trendy investment but the fundamentals do not necessarily back it up. • Examples: • Tech bubble of 1999-2000 • Facebook IPO of May 2012

  6. Technical Analysis - Charts • Charts will often be used to show the psychology of the market. • Bullish - Buyers dominate the market driving up prices • Bearish - sellers dominate the market bringing prices down • The type of market is often revealed by the prices a security seldom moves above (resistance) or below (support). • Support – the level at which a price is considered to not fall below otherwise it is on a downward trend • Resistance – the level at which a price needs to surpass to be considered to be on an upward trend. • Support and resistance analysis is an important part of trends because it can be used to make trading decisions and identify when a trend is reversing

  7. The chart below shows a support level of 30.4 and a resistance of 32. What price needs to be reached for investors to be considered bullish or bearish?

  8. What is the resistance and support of the following stocks?

More Related